Delta Galil Industries, Ltd. (DELT/Tel Aviv Stock Exchange, DELTY.PK), the global manufacturer and marketer of branded and private label apparel products for men, women and children, as well as leisurewear, activewear and denim, today reported its financial results for the fourth quarter and full year ended December 31, 2020.
Highlights
- Q4 sales were $459.7 million in 2020, compared to $504.8 million in 2019, a 9% decrease due to the effects of the COVID-19 pandemic.
- E-commerce own website sales rose 183% for Q4, up 130% for the full year.
- Q4 2020 gross margin increased by 300 basis points to a record level of 40.1%, versus 37.1% in Q4 2019.
- Q4 2020 operating margin increased 0.3% to a record level of 10.4%, versus 10.1% in Q4 2019.
- Q4 earnings per share (EPS) excluding one-time items amounted to $1.08 in 2020, versus $1.37 in 2019.
- 2020 operating cash flow excluding IFRS 16 impact strengthened by $64.45 million, to a record $161.6 million, from $97.1 million in 2019.
- Strong balance sheet highlighted by $231.7 million in cash, and $476.4 million in equity as of December 31, 2020. Net financial debt declined by nearly 30% to $236.3 million, versus December 31, 2019 level.
- Acquired U.S. online intimates retailer Bare Necessities, reflecting Delta’s strategic growth objective to diversify its distribution channels, while enhancing its digital reach.
Isaac Dabah, CEO of Delta Galil, stated: “Without a doubt, 2020 represented an unprecedented year for Delta Galil, as COVID-19 forced us to rethink ways in which we conduct business. I am pleased with our agility to respond to the pandemic and implement the necessary initiatives to reduce costs and improve our operational and financial flexibility. Consequently, we saw record gross and EBIT margins in the fourth quarter, and record operating cash flow for the year, demonstrating a strong combination of Delta’s rapid online expansion, coupled with the strength of our brands, loyal customer base, and the effects of our strategic efficiency measures, which we foresee continuing in the future.
Throughout the year, we remained committed to pursuing growth online both on our own site and through our Internet customers. As we previously announced, Delta acquired online intimates retailer Bare Necessities, which enhances our presence in the digital world. We ended the year with strong online sales, and we will continue to look for new ways to excel digitally.
In addition, we are pleased to update on the successful IPO completion of Delta Israel Brands (ticker symbol DLTI.TA), our Israeli subsidiary, which raised $80 million in a post money valuation of $400 million from leading Israeli institutional investors. With a strong management team in place, and a solid financial performance this past year, this IPO represents an important achievement and a natural step in the evolution of Delta Israel Brands as a leading brand in Israel for underwear, pajamas, and leisure wear for the entire family.”
Sales
The Company reported sales of $459.7 million for the fourth quarter of 2020, compared to $504.8 million for the fourth quarter of 2019, a 9% decrease. The decrease in sales was primarily due to reduced volume in Delta Galil Premium Brands, Delta USA and Global Upper Market business segments following the outbreak of COVID-19. Sales for the 2020 full year were $1,446.2 million, compared to $1,690.2 million for the same period last year, representing a 14% decrease.
Online Sales
E-commerce own website sales rose 183% for the fourth quarter of 2020 to $76.1 million, compared to $26.9 million for the fourth quarter of 2019. E-commerce own website sales increased 130% for the full year 2020 to $152.5 million.
Operating Profit
Operating profit for the fourth quarter was $43.4 million, compared to $52.2 million in the fourth quarter last year. Before one-time items, operating profit was $47.7 million, compared to $51.2 million in the fourth quarter of 2019, a 6.8% decrease.
For the 2020 full year, operating loss was $7.1 million, compared to operating profit of $103.7 million for 2019. Before one-time items, operating profit for the 2020 full year was $49.3 million, compared to $106.0 million for the comparable period last year.
Net Income (Loss)
Net income for the fourth quarter of 2020 was $23.7 million, compared to $35.6 million in the fourth quarter last year. Excluding one-time items, net income was $27.3 million for the fourth quarter of 2020, compared to $34.8 million in the fourth quarter of 2019.
For the 2020 full year, net loss was $40.5 million, compared to net income of $57.7 million for the same period last year. Excluding one-time items, net income was $3.8 million for the 2020 full year, compared to $60.2 million for the same period last year.
Diluted Earnings Per Share
Diluted earnings per share for the fourth quarter of 2020 were $0.94, compared to $1.39 in the fourth quarter of 2019. Excluding one-time items, diluted earnings per share were $1.08 for the fourth quarter of 2020, compared to $1.37 for the comparable quarter last year.
For the 2020 full year, diluted loss per share amounted to $1.56, compared to earnings per share of $2.26 for the 2019 full year. Excluding one-time items, diluted earnings per share amounted to $0.18 for the 2020 full year, compared to earnings per share of $2.36 for the comparable period last year.
EBITDA, Cash Flow, Net Debt and Equity
EBITDA was $71.9 million in the fourth quarter of 2020, compared to $76.1 million in the fourth quarter of 2019. Excluding IFRS 16, EBITDA for the fourth quarter of 2020 $55.6 million, compared to $60.7 million for the comparable fourth quarter of 2019.
EBITDA for the 2020 full year was $144.0 million, compared to $195.6 million for 2019. Excluding IFRS 16, EBITDA for the 2020 full year was $81.1 million, compared to $137.7 million in 2019.
Operating cash flow excluding IFRS 16 for the twelve months ended December 31, 2020 was $161.6 million, compared to $97.1 million for the twelve months ended December 31, 2019, a $64.5 million increase.
Net financial debt as of December 31, 2020 was $236.3 million, a decrease of $98.2 million compared to $334.5 million as of December 31, 2019.
Delta increased the Company’s committed and uncommitted credit facilities to a total of $248 million, of which $237 million was un-utilized as of December 31, 2020.
Equity on December 31, 2020 was $476.4 million, compared with $506.9 million a year earlier.
About Delta Galil Industries
Delta Galil Industries is a global manufacturer and marketer of branded and private label apparel products for men, women and children. Since its inception in 1975, the Company has continually strived to create products that follow a body-before-fabric philosophy, placing equal emphasis on comfort, aesthetics and quality. Delta Galil develops innovative seamless apparel including bras, shapewear and socks; intimate apparel for women; extensive lines of underwear for men and branded Men’s underwear including the brands Schiesser, Eminence, Athena & Liabel; babywear, activewear, sleepwear such as the PJ Salvage brand, and leisurewear. Delta Galil also designs, develops markets and sells branded denim and apparel under the brand 7 For All Mankind®, and ladies apparel under the brands Splendid® and others. In addition, it sells its products under brand names licensed to the company, including Wilson, Spalding, Columbia, Tommy Hilfiger and others. For more information, visit www.deltagalil.com.
Safe Harbor Statement
Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may" "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein, and while expected, there is no guarantee that we will attain the aforementioned anticipated developmental milestones. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.
DELTA GALIL INDUSTRIES LTD.
| ||||
December 31 | ||||
2020 | 2019 | |||
(audited) | ||||
Thousands of Dollars | ||||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | 230,843 | 108,294 | ||
Restricted Cash | 898 | 933 | ||
Other accounts receivable: | ||||
Trade receivables | 200,201 | 212,311 | ||
Taxes on income receivable | 18,305 | 2,867 | ||
Others | 38,255 | 35,200 | ||
Financial derivative | 2,020 | 971 | ||
Inventory | 291,703 | 328,108 | ||
Total current assets | 782,225 | 688,684 | ||
Non-current assets: | ||||
Investments in associated companies accounted
| 14,668 | 14,367 | ||
Investment property | 3,389 | 3,228 | ||
Fixed assets, net of accumulated depreciation | 209,465 | 213,210 | ||
Goodwill | 150,657 | 148,001 | ||
Intangible assets, net of accumulated amortization | 266,967 | 273,318 | ||
Assets in respect of usage rights | 217,777 | 207,651 | ||
Deferred tax assets | 15,590 | 19,678 | ||
Financial derivative | 31,593 | 19,677 | ||
Total non-current assets | 910,106 | 899,130 | ||
Total assets | 1,692,331 | 1,587,814 | ||
DELTA GALIL INDUSTRIES LTD.
| ||||
December 31 | ||||
2020 | 2019 | |||
(audited) | ||||
Thousands of Dollars | ||||
| Liabilities and Equity | ||||
Current liabilities: | ||||
Short-term bank loans | 11,013 | 1,868 | ||
Current maturities of bank loans | 20,295 | 10,588 | ||
Current maturities of debentures | 39,029 | 36,802 | ||
Financial derivative | 170 | 2,070 | ||
Current maturities of leases liabilities | 60,363 | 53,401 | ||
Other accounts payable: | ||||
Trade payables | 186,903 | 140,475 | ||
Taxes on income payable | 26,294 | 16,392 | ||
Provision for restructuring plan | 26,825 | 1,435 | ||
Others | 150,737 | 138,802 | ||
Total current liabilities | 521,629 | 401,833 | ||
Non-current liabilities: | ||||
Bank loan | 104,096 | 68,337 | ||
Severance pay liabilities less plan assets | 9,499 | 10,155 | ||
Liabilities in respect of leases | 182,408 | 172,903 | ||
Other non-current liabilities | 43,030 | 47,899 | ||
Debentures | 316,764 | 340,376 | ||
Deferred taxes liabilities | 38,513 | 39,368 | ||
Total non-current liabilities | 694,310 | 679,038 | ||
Total liabilities | 1,215,939 | 1,080,871 | ||
Equity: | ||||
Equity attributable to equity holders of the parent company: | ||||
Share capital | 23,714 | 23,714 | ||
Share premium | 130,260 | 130,237 | ||
Other capital reserves | 6,604 | (7,962) | ||
Retained earning | 332,268 | 376,763 | ||
Treasury shares | (16,067) | (16,093) | ||
476,779 | 506,659 | |||
Minority interests | (387) | 284 | ||
Total equity | 476,392 | 506,943 | ||
Total liabilities and equity | 1,692,331 | 1,587,814 | ||
DELTA GALIL INDUSTRIES LTD.
| ||||||||||||
Year ended December 31 | %
| Three months ended December 31 | %
| |||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
(audited) | ||||||||||||
Thousands of Dollars | ||||||||||||
Except for Earnings per Share Data | ||||||||||||
Sales | 1,446,187 | 1,690,164 | (14%) | 459,679 | 504,764 | (9%) | ||||||
Cost of sales | 922,502 | 1,086,005 | 275,252 | 317,468 | ||||||||
Gross profit | 523,685 | 604,159 | (13%) | 184,427 | 187,296 | (2%) | ||||||
% of sales | 36.2% | 35.7% | 40.1% | 37.1% | ||||||||
Selling and marketing expenses | 385,507 | 429,705 | (10%) | 113,796 | 117,196 | (3%) | ||||||
% of sales | 26.7% | 25.4% | 24.8% | 23.2% | ||||||||
General and administrative expenses | 77,011 | 74,042 | 4% | 21,035 | 21,568 | (2%) | ||||||
% of sales | 5.3% | 4.4% | 4.6% | 4.3% | ||||||||
Trade receivable credit loss | 9,671 | (865) | 927 | (1,405) | ||||||||
Other Expenses (income), net | 2,634 | (3,739) | 1,129 | (972) | ||||||||
Share in profits of associated company accounted for using the equity method | (397) | (950) | (194) | (316) | ||||||||
Operating income excluding non-recurring items | 49,259 | 105,966 | (54%) | 47,734 | 51,225 | (7%) | ||||||
% of sales | 3.4% | 6.3% | 10.4% | 10.1% | ||||||||
Restructuring expenses | 39,154 | (987) | - | (987) | ||||||||
Non-monetary assets impairment | 16,811 | - | 4,031 | - | ||||||||
Deal cost | 435 | 3,273 | 309 | - | ||||||||
Operating income (loss) | (7,141) | 103,680 | 43,394 | 52,212 | (17%) | |||||||
Finance expenses, net | 37,475 | 36,065 | 9,762 | 10,630 | ||||||||
Income (loss) before tax on income | (44,616) | 67,615 | 33,632 | 41,582 | ||||||||
Taxes on income (Tax savings) | (4,095) | 9,915 | 9,892 | 6,013 | ||||||||
Net income (loss) for the period | (40,521) | 57,700 | - | 23,740 | 35,569 | (33%) | ||||||
Net income (loss) for the period excluding one-time items, net of tax | 3,811 | 60,213 | 27,270 | 34,809 | ||||||||
Attribution of net earnings (loss) for the period: | ||||||||||||
Attributed to company's shareholders | (39,850) | 57,898 | 24,068 | 35,721 | ||||||||
Attributed to non-controlling interests | (671) | (198) | (328) | (152) | ||||||||
(40,521) | 57,700 | 23,740 | 35,569 | |||||||||
Net diluted earnings (loss) per share attributed to company's shareholders | (1.56) | 2.26 | - | 0.94 | 1.39 | (32%) | ||||||
Net diluted earnings per share, before non-recurring items, net of tax attributable to Company's shareholders | 0.18 | 2.36 | (92%) | 1.08 | 1.37 | (21%) | ||||||
DELTA GALIL INDUSTRIES LTD.
| ||||
Year ended
| ||||
2020 | 2019 | |||
(audited) | ||||
Thousands of Dollars | ||||
Cash flows from operating activities: | ||||
Net income (loss) for the period | (40,521) | 57,700 | ||
Adjustments required to reflect cash flows deriving from operating activities | 282,916 | 127,228 | ||
Interest paid in cash | (23,185) | (22,161) | ||
Interest received in cash | 1,062 | 440 | ||
Taxes on income paid in cash, net | (1,867) | (8,159) | ||
Net cash generated from operating activities | 218,405 | 155,048 | ||
Cash flows from investment activities: | ||||
Acquisition of fixed assets and intangible assets | (21,448) | (30,069) | ||
Payments under subsidiaries purchase transaction, net of cash of the acquired subsidiaries | (13,469) | (26,811) | ||
Restricted cash release (deposit) | - | 2,561 | ||
Bank deposit with respect to SWAP transaction | 1,770 | - | ||
Providing long term loans | - | (18,102) | ||
Providing a loan to a business partner | (2,500) | - | ||
Proceeds from selling fixed asset | 568 | 479 | ||
Others | 305 | 979 | ||
Net cash used in Investing activities | (34,774) | (70,963) | ||
Cash flows from financing activities: | ||||
Dividends paid to non-controlling interest holders in consolidated subsidiary | ||||
- | (346) | |||
Long term payables credit for fixed assets purchase | (3,787) | (3,503) | ||
Lease principle repayment | (56,858) | (57,912) | ||
Debentures principle repayment | (37,568) | (29,748) | ||
Dividend paid | (6,506) | (11,084) | ||
Long term loan received (repayment of long-term loans) from bank, net | 34,686 | (8,944) | ||
Short-term credit from banking corporations, net | 11,013 | (82,907) | ||
Proceed from Debentures Issuance, net of Issuance expenses | - | 150,137 | ||
Repayment of long-term loans from suppliers | (8,855) | (3,350) | ||
Net cash generated from ( used in) financing activities | (67,875) | (47,657) | ||
Net increase (decrease) in cash and cash equivalents | 115,756 | 36,428 | ||
Exchange rate differences and revaluation of cash and cash equivalents, net | 8,661 | (536) | ||
Balance of cash and cash equivalents less bank overdraft at the beginning of the period, net | 106,426 | 70,534 | ||
Balance of cash and cash equivalents less bank overdraft at the end of the Period, net | 230,843 | 106,426 | ||
| DELTA GALIL INDUSTRIES LTD. Consolidated Cash Flow Reports | ||||
Year ended
| ||||
2020 | 2019 | |||
(audited) | ||||
Thousands of Dollars | ||||
Adjustments required to reflect cash flows
| ||||
Revenues and expenses not involving cash flow: | ||||
Depreciation | 36,353 | 30,631 | ||
Amortization | 62,063 | 59,193 | ||
Non-monetary assets impairment | 16,811 | - | ||
Cash erosion, net | 1,082 | (219) | ||
Interest paid in cash | 23,185 | 22,161 | ||
Interest received in cash | (1,062) | (440) | ||
Taxes on income paid in cash, net | 1,867 | 8,159 | ||
Deferred taxes on income, net | 522 | 58 | ||
Discount component for lease agreements | 9,836 | 8,474 | ||
Severance pay liability, net | (579) | (250) | ||
Restructuring expenses ,net | 25,390 | (987) | ||
Decrease in leases liabilities due to rent reliefs | (6,026) | - | ||
Capital loss (gain) from sale of fixed assets and asset held for sale | (263) | (86) | ||
Benefit component of options and RSU granted to employees | 1,291 | 1,200 | ||
Provision for credit losses and other receivables update | 12,586 | (865) | ||
Share in profits of associated company accounted for using the equity method | (397) | (950) | ||
Others | 2,651 | 397 | ||
185,310 | 126,476 | |||
Changes to operating assets and liabilities: | ||||
Decrease (increase) in trade receivables | 6,408 | 31,923 | ||
Decrease in other receivable and balances | (18,882) | (5,875) | ||
Increase (decrease) in trade payables | 39,024 | (40,726) | ||
Increase (decrease) in other payables | 7,405 | 2,972 | ||
Decrease (increase) in inventory | 63,651 | 12,458 | ||
97,606 | 752 | |||
282,916 | 127,228 | |||
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